The pressure to keep up with the U.S. appetite for oil is never-ending, but most E&P companies refuse to stop trying. The hunt for more oil resources is in full swing, but is it already too late? Some energy analysts say the nation is in a deep energy hole that is dangerously approaching collapse. Matthew Simmons, chairman of Simmons & Co. International, and Ann-Louise Hittle, head of macro-energy for Wood Mackenzie, say the U.S. had an energy-supply wakeup call in 2004, and they hope the industry was paying attention. "Several pressures on the industry have resulted in our position today," Hittle told an audience at the IPAA annual meeting in Houston. "Demand growth, years of weak margins slowing refinery investments, lack of supply data in key areas, rising costs, resource restraints, limited access to resource-rich areas and reliance on Saudi Arabia for spare capacity are prominent." Simmons said, "America and the world were drafted into a benign energy war. Demand was supposed to peak, oil supplies were supposed to grow and stay cheap, and costs were supposed to fall. Instead demand grew too fast and never peaked, costs doubled, new supplies got smaller, proven reserves got harder to nail down and energy-reserve cushions were viewed as glut." All of this was a dream and "the alarm clock is ringing." He added, "The real demand story is that it grew by 15 million barrels per day in the past decade, the fourth-quarter non-OPEC supply surge went AWOL and too many countries peaked." Despite this scenario, Simmons said believers still think demand growth is slowing and technology is converting nonconventional oil fairly fast. He added that a number of industry leaders still say supply is no problem, and he quoted the incoming chief executive of ExxonMobil as having said we still have 3 trillion barrels of useable oil left. "We now have three types of oil and gas reserves," Simmons said. "The proven conventional, the proven unconventional and the 'conceptual' reserves-they're not found yet but we're sure they're there. There are way too many long-term [supply] models banking on conceptual reserves." The resulting destruction of this year's hurricane season made things worse. Between hurricanes Rita and Katrina alone, the Gulf of Mexico was "bombed, Gulf facilities crushed, refineries broken and the workforce AWOL with no place to live and preferring to be where their families were," he said. But the storms were just the match that lit the explosion, he continued, and one of the lessons learned is that just-in-time oil inventory is gone. "Nimby [attitudes] shoved a great deal of precious assets right in the path of these hurricanes." Folks don't realize that 2020 is almost here, he said. Major oil and gas projects can take anywhere from five to seven years to complete while new frontiers can take 10 to 20 years to develop. Equally disturbing is that Saudi Arabia may not have the capacity to swoop in and save the day. "Dr. Al Husseini [a former Saudi Aramco executive] himself has said that the best-case scenario for Middle East capacity by 2020 is 25 million barrels per day." While the "royal family of oil fields" in Saudi Arabia continues to produce, several of them are 40 to 60 years old and the general production base is in decline, Simmons said. "Natural gas is going to be the next big surprise. Too many areas have already passed the peak and not enough stranded gas has been discovered. Gas depletes much faster than oil." And though many in the industry are touting the benefits of nonconventional resources, Simmons said nonconventional oil is hard to use and tar sands require massive amounts of energy for conversion into heavy oil. "This hole we're in took decades to create and digging deeper puts us at risk of it collapsing," Simmons said. "This was decades of bad data and poor analysis and too many times where strong opinions overruled industry fundamentals."